How I lost $50,000+

Four years ago I started Bitcoin mining.

Since then, I’ve put about $22,000 into a hosted mining setup… and I ended with 0.17 BTC.

If I had put basically the same money into a smarter DCA approach over the same window, I’d have ended with 0.89 BTC.

Today I’m going to show you:

• the receipts
• the two traps that made this fail
• and the cleaner default I’d use instead

Not financial advice. Just one guy showing his work.

1) The pitch that got me (and why it still works on people)

Back in late 2021, mining was everywhere.

Podcasts. YouTube. Twitter threads.

Same story every time:

• “Real bitcoiners don’t just buy, they mine.”
• “It cash-flows.”
• “It’s a tax write-off.”
• “It’s passive.”

And on paper it looks great.

You send money. The machine runs. Sats show up while you sleep.

That’s the first lie you’re paying for.

Passive income is almost always just someone else doing the work while you take the risk.

On December 1st, 2021, I wired $16,000+ to a hosted mining company for a single ASIC.

On paper it looked clean.

In real life, it turned into two big mistakes.

2) The receipts (what I actually got)

Here’s how it actually went down for my hosted mining path

Hosted Mining

• Total invested: $21,969.60
• Total BTC: 0.1686 BTC
• Value Today: $15,224.36
• P&L: -$6,745.24
• ROI: -30%
• Cost basis: $130,295

That cost basis is the part people don’t feel in the moment.

It’s basically like I spent four years buying Bitcoin at “future ATH” prices.

3) Mistake #1

My miner didn’t come online in 2021.

It didn’t even come online in 2022.

It finally started hashing in February 2023.

That entire year-plus was just dead time.

And if you remember one thing from this post:

Delays are catastrophic in mining because difficulty doesn’t wait.

While I waited:

• network hashrate climbed
• difficulty climbed
• the projections I bought became stale

I had the same miner with the same hashrate.

But a smaller slice of a bigger pie.

(The pie actually literally doubled so I made half as much money)

That install gap is the first way hosted mining bleeds you.

4) Mistake #2

Even after the miner is online, hosted mining has a brutal structure:

You don’t control the only input that matters: power.

I didn’t own the facility.

I didn’t control the power contract.

I couldn’t force uptime.

I couldn’t fix anything.

So here’s what that means in practice:

My hosting payments were consistent.

My BTC output wasn’t.

Over this experiment, I made 35+ hosting payments in dollars.

The provider gets stable cash flow.

You get variable sats that tend to get eaten into over time.

And when something goes (sideways capacity issues, downtime, repairs, power price spikes etc) you’re paying for it.

I call this:

Return-free risk.

You take the risk. You pay for it. You don’t get compensated for it.

5) The fair comparison: Bitcoin should be the scoreboard

Ultimately, this is a Bitcoin story.

So Bitcoin should be the scoreboard.

Here are the two “what if I did literally anything simpler” comparisons.

A) What if I just bought Bitcoin?

Same total spend, same dates. Just purchases instead of mining.

Simple DCA (same payments, same days)

• Total invested: $21,969.60 (same)
• Total BTC: 0.3892 BTC
• Value Today: $35,140.34
• P&L: +$13,170.74
• ROI: 59.95%
• Cost basis: $56,449.79

That’s already a massacre compared to hosted mining.

B) What if I used an augmented DCA strategy?

Then I re-ran basically the same dollars through a moderate AlphaSquared-augmented DCA strategy:

• Total invested: $21,778 (about $200 less)
• Ending BTC: 0.89 BTC
• Value Today: ~$82,335

Same timeframe. Same market. Same me.

One path got me: 0.17 BTC.

The other got me: 0.89 BTC.

This isn’t a rounding error.

Hosted mining is broken.

6) Why people keep falling for this

Pitch #1: “Passive income”

If you’re the hosting company (or the influencer getting referral payouts), the income is passive.

If you’re the customer:

• tracking uptime
• tracking fees
• dealing with delays and support
• watching difficulty climb
• watching hosting costs creep up

…and then still asking: “Did I end up with more Bitcoin?”

In my case: no.

Verdict: passive income isn't real. If you hear someone say it, run away.

Pitch #2: “Tax write-off”

Tax benefits are only interesting when the underlying decision is good.

Turning $1 into $0.60 more efficiently is not a win.

If a strategy only makes sense after someone explains the tax angle… it’s usually not a great strategy.

7) When you should mine Bitcoin

Mining can make sense if you literally own your own power plant.

You don't.

Next question.

8) What I’d do instead

I also like strategies that don’t smuggle in extra failure points.

• Plain DCA already does that.
• Augmented DCA can take it further without turning your life into a trading desk.

And when I ran my own numbers, moderate AlphaSquared-augmented DCA ended at 0.89 BTC on basically the same spend.

That’s the lesson I wish I had in 2021:

Keep it simple. Avoid return-free risk. Stop paying people to introduce extra ways for your plan to break.

If you want to see exactly how that augmented DCA works (the risk number, the “moderate” strategy, and how to set it up so it runs automatically) watch this video.